Industry 4.0 is Driving Transformation in Finance and Accounting
Clayton & McKervey, a certified public accounting and business advisory firm helping growth-driven companies compete in the global marketplace, has watched the advanced and automated technologies used by manufacturers increasingly materialize in other business sectors. Manager Bryan Powrozek, who is a CPA and engineer dedicated to the firm’s System Integrators practice, noted that Industry 4.0 technologies have definitely extended their reach into professional services because they drive efficiency and improve operational performance.
“The term Industry 4.0 conjures up images of high-tech factories filled with connected robots performing work previously done by people, but the technologies enabling this transformation are not just confined to the plant floor,” Powrozek said. “They can be used in finance and accounting to keep a business operating or provide analytics for better strategic insights.”
Powrozek pinpointed some key technologies currently impacting finance and accounting:
- Robotics– These “bots” are software applications developed to automate many of the repetitive, manual back-office tasks like entering customer and vendor invoices and payments.
- Internet of Things– This increase in interconnectivity means that information previously stored in disparate systems or business units is now connected seamlessly.
- Big Data – Enabled by the increase in the quality and quantity of data available within organizations, decision-makers are able to mine the available data for more and better insights. Also, the widespread availability of software applications capable of performing higher-level data analytics will lower the barrier to entry for businesses.
- Artificial Intelligence – Similar to the bots, companies can utilize artificial intelligence to automate routine decision-making processes. One example is when bots develop new bots when they recognize that particular repetitive tasks can be automated.
Powrozek acknowledged there are risks and challenges involved when implementing Industry 4.0 technologies into finance and accounting functions and advised on five key areas to consider.
- Commitment to Change: Any new technology or system needs buy-in from all stakeholders; make sure all teams understand that short-term challenges will result in improved operations in the future.
- Understanding Your “Current State:” Robotic Process Automation is a powerful tool for improving the consistency and efficiency of a company’s finance and accounting function, but it can only be successful if it is consistent and repeatable. In many organizations, individuals either follow their own process for completing tasks or have developed “work arounds” for processes they disagree with or find to be inefficient. These processes need to be defined—and ideally streamlined—prior to automating them in order for automation to work.
- Know Your Data: Big Data and data analytics are simply a tool that if used properly can help you run your business better, but if used improperly, can result in poor decisions and wasted resources. Two fundamental questions should first be answered: ‘What are we trying to answer?’ and ‘What data do we need to answer that question?’ Much of the data initially created was not intended for this level of analysis, so companies need to evaluate what they have to make sure it is accurate and complete.
- Assess Your Skill Gaps: Many finance and accounting professionals have little-to-no formal training with Industry 4.0 technologies. Companies need to address whether they should train existing employees or seek outside individuals with these specific skills to address the gaps.
- Cybrsecurity: The increase in connectivity greatly broadens the surface area that companies need to defend since an intrusion in one department or facility could provide hackers access to an entire company. Hackers are aware that companies have started investing in these advanced technologies and are looking for new ways to exploit this connectivity. For example, a hacker could gain access to a company’s network, find their accounts payable bot, and examine the function of this bot—subsequently exploiting it to process fictitious transactions. Because the bot would still be functioning properly, it could take a significant amount of time before management becomes aware of this issue. A scenario such as this takes cybersecurity considerations to another level to ensure information is not compromised, data is secure, and operations are not jeopardized.
As with any new technologies, these risks and challenges shouldn’t prevent companies from pursuing them because the benefits may outweigh the risks, Powrozek said. They simply underscore the importance of careful and thorough planning before moving ahead.